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Not only is it not state land, the state can only make the land available for sale, it cannot direct who is permitted to purchase it. The group building the mosque would need to be the high bidder. The state would have more latitude if this were a public project, but it is not.

I would have a problem with public property being given to any church of any denomination.

Additionally, how could the state support ANY organization that is not compliant with anti-discrimination laws? The BoyScouts of America were taken off the CFC campain (military version of United Way for the non-military types) because they prohibited gays. I understand we're talking state vs federal, but aren't the principles and laws basically similar?